Phillip A. O'Bryon and Cyndie W. O'Bryon - Page 30

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          Miscellaneous Schedule C Deductions                                         
               In the notice of deficiency, respondent disallowed a number            
          of Schedule C deductions that petitioners claimed on their 1991             
          and 1992 tax returns.  They include investment losses, interest             
          expenses, travel expenses, commission expenses, and dues.  In the           
          March 20, 2000, settlement, petitioners conceded these deductions           
          in full.  We conclude that respondent's position was                        
          substantially justified.                                                    
          Amount of Reasonable Attorney's Fees and Costs                              
               We now consider the amount of costs that petitioners may               
          recover.  Petitioners were the prevailing party with respect to             
          issues involving the deductibility of losses from Diplomat                  
          Associates.  They were not, however, the prevailing party with              
          respect to any other issues.                                                
               Administrative costs are those incurred in connection with             
          an administrative proceeding within the IRS.  Sec. 7430(a)(1),              
          (c)(2).  Reasonable administrative costs consist of any fees or             
          expenses imposed by the IRS, the reasonable expenses of necessary           
          expert witnesses, the reasonable cost of any necessary study,               
          analysis or report and reasonable fees paid or incurred for the             
          services of attorneys.  See sec. 7430(c)(2).  Attorney's fees are           
          those "for the services of an individual (whether or not an                 
          attorney) who is authorized to practice before the Tax Court or             
          before the [IRS]".  Sec. 7430(c)(3).                                        

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